The global banking sector recorded a total shareholder return of 30.2% in 2025, outperforming information technology and all other major sectors, according to the Boston Consulting Group. This surge in profitability has been observed across the sector, with many financial institutions reporting their best profit and earnings figures since before the financial crisis.
Deutsche Bank, a German lender, announced record profits in 2025 and is trading ahead of its long-term profitability targets. The bank reported a post-tax return on tangible equity of 10.3% and a profit before tax of €9.7 billion, an 84% increase year-on-year. Management outlined plans in January to return up to €2.9 billion to shareholders, including a €1 per share dividend and a €1 billion share buyback authority.
In the UK, Metro Bank also reported a record level of income in the first quarter, achieving a return on tangible equity of 6.4%. The bank's net interest income rose by 22%, with its net interest margin at 3.17%. Lending to small businesses increased by 67%, and the bank reduced costs by 7%.
The sector's improved performance is attributed to falling costs, partly due to the adoption of AI, and a stronger interest-rate environment over the past five years. US employment data indicates that payrolls in financial services and information technology have declined by an average of 28,000 per month in 2026 due to accelerated AI adoption. Several major banks, including Standard Chartered, have announced job cuts related to AI integration.
Banks have also benefited from higher net interest margins. Lloyds Bank, for instance, reported a net interest margin of 2.95% in 2024, 3.06% in 2025, and 3.17% in the first three months of 2026, even as interest rates have fallen from 5.25% in early 2024 to 3.75% today.